PRELIM EXAM

4. COST OF INVENTORY DESTROYED BY FIRE

Inventory, January 01 82,500.00
Shipment form HO 55,000.00
Less: COGS
Sales 84,500.00
Less: Sales return and allowances 1,875.00
Purchased from outsider 4,500.00
Net sales 78,125.00
Multiplied by ratio 100/125 % 62,500.00
Inventory, Nov 01 75,000.00
Multiplied by cost ratio 100/125
Merchandise inventory at cost destroyed by fire 60,000.00

5. COST OF SALES
Inventory, January 01 82,500.00
Shipment form HO 55,000.00
Less: COGS
Sales 84,500.00
Less: Sales return and allowances 1,875.00
Purchased from outsider 4,500.00
Net sales 78,125.00
Multiplied by ratio 100/125 % 62,500.00
Inventory, Nov 01 75,000.00
Multiplied by cost ratio 100/125
Merchandise inventory at cost destroyed by fire 60,000.00

6. DIFFERENCE IN FREIGHT CHARGE

Freight acutally pad 8,000.00
Less: Freight - recorded 9,000.00
Savings 1,000.00

7. NET INCOME OF IVONNE BRANCH

Net income - branch 988,650.00
Less: Depreciation expenses 3,000.00
Allocated expenses 14,400.00
Adjusted 971,250.00
210,000.00
True income of branch 1,181,250.00

8. COST OF GOODS AVAILABLE FOR SALE OF THE BRANCH

Unadjusted Incentory - branch 242,000.00
Add: Shipment from HO 840,000.00
Beginning inventory from HO 37,000.00
Divide by billed cost 125% 968,000.00

Purchase from outsiders 35,000.00

Beginning inventory 220,000.00 255,000.00
Cost of goods available for sale 1,465,000.00

9. COST OF GOODS SOLD - DEC. 31, 2021

Beginning Invenotry - HO 360,000.00
Beginning Invenotry - Outsiders 93,000.00
Beginning Inventory 453,000.00
Inventory shipped to HO 237,700.00
Inventory - Outsiders 125,000.00
Inventory available for sale 815,700.00
Ending inventory 345,000.00
Cost of goods sold 470,700.00

11. ALLOWANCE FOR UNREALIZED GROSS MARGIN

Cost 125% Difference
Beginning 1,440,000.00 1,800,000.00 360,000.00
Shipment from HO 9,000,000.00 11,250,000.00 2,250,000.00
Goods available for sale 10,440,000.00 13,050,000.00 2,610,000.00
Ending 5,700,000.00 7,125,000.00 1,425,000.00
COGS 4,740,000.00 5,925,000.00 1,185,000.00

12. COST OF GOODS AVAILABLE FOR SALE - HO

Inventory, January 01 1,575,000.00
Add: Purchases 35,000.00
Total goods available for sale 1,610,000.00

13. COST OF GOODS AVAILABLE FOR SALE - BRANCH

Inventory, January 01 101,500.00
Shipment from HO 329,875.00
Purchases 350,000.00
Cost of goods available for sale 781,375.00

14. TOTAL ENDING INVENTORY - COMBINED

Ending Invenotry - Outsider 48,475.00
Ending Invenotry - HO 280,000.00
Total ending inventory 328,475.00

15. COMBINED NET INCOME

COMBINED
Sales 3,360,000.00
COGS 1,717,275.00
Gross Profit 1,642,725.00
Operating expenses 700,000.00
Net Income 942,725.00

17. According to problem the branch has P 33,000

18. COMBINED NET INCOME

Sales 590,000.00
Cost of sales
Inventory, January 01 67,100.00
Purchases 380,000.00
Freight In 11,000.00 391,000.00
Cost available for sale 458,100.00
Inventory, December 31 104,000.00
Freight In 2,200.00 106,200.00 351,900.00
Gross Profit 238,100.00
Expenses 162,100.00
Combined net income 76,000.00

19. TRUE NET INCOME - LEYTE

Sales 134,400.00
Less: COGS
Shipment from HO 168,000.00
Less: Ending inventory 50,400.00
 COGS 117,600.00
Multiplied by cost ratio 100/140 84,000.00
Gross Profit 50,400.00
Less: COGS 10,800.00
Net income 39,600.00

21. GOODWILL
Share acquired 1,350,000.00
Contingent liability 750,000.00
Total acquisition cost 2,100,000.00

Cash 45,000.00
Accounts receivables 54,000.00
Inventory 78,000.00
Prepaid expenses 5,000.00
Land 1,550,000.00
Buildong 768,000.00
Equipment 360,000.00 2,860,000.00

Accounts payable 200,000.00

Notes payable 765,000.00 965,000.00 1,895,000.00

Goodwill 205,000.00

22. CASH
Total cash 685,000.00
Less: acquisition cost 574,000.00
Total amount of cash 111,000.00

23. INVENTORY
Fred -BV 475,000.00
Cheng - FV 78,000.00
Total amount of inventory 553,000.00

24. LAND AND BUILDING

Fred - BV 2,800,000.00
Cheng - FV 2,318,000.00
Total amount of land and building 5,118,000.00

25. EQUIPMENT
Fred - BV 700,000.00
Cheng - FV 360,000.00
Total amount of equipment 1,060,000.00

26. NOTES PAYABLE

Fred - BV 937,500.00
Cheng - FV 765,000.00
Total amount of notes payable 1,702,500.00

27. LIABILITIES
Accounts payables 512,500.00
Notes payable 1,702,500.00
Contingent consideration 750,000.00
Total amount of liabilities 2,965,000.00

28. SHARE CAPITAL

Shares 1,000,000.00
add: share cap. 2,000,000.00
Total amount of share capital 3,000,000.00

29. SHARE PREMIUM

Accounts Payable 512,500
Notes Payable 1,702,500
Share Capital, 50 Par 3,000,000
Share Premium 944,600
Retained Earnings 531,400
Total 7,491,000

30. RETAINED EARNING

Accounts Payable 512,500
Notes Payable 1,702,500
Share Capital, 50 Par 3,000,000
Share Premium 944,600
Retained Earnings 531,400
Total 7,491,000

31. RETAINED EARNINGS AND LIABILITIES

Retained earning 250,000.00
Less: Acquisition cost 19,000.00
Retained earning 231,000.00

Liab. - Marks and Spencer 100,000.00

Contingent consideration 15,000.00
Acquisition cost 19,000.00
Liabilities 134,000.00

33. GOODWILL - ACQUISITION DATE

Ordinary Share 7,440,000.00

Current asset 1,150,000.00

Equipment 1,700,000.00
Land 600,000.00
Building 3,600,000.00
Less: Liabilities 960,000.00 6,090,000.00
Goodwill 1,350,000.00

34. GOODWILL - JANUARY 01,2025

Paid 7,440,000.00
Current asset 1,150,000.00
Equipment 1,700,000.00
Land 600,000.00
Building 3,600,000.00
Liabilities (912,500.00) 6,137,500.00
Goodwill 1,302,500.00

35. GOODWILL - JANUARY 01, 2026

Paid 7,440,000.00
Current asset 1,150,000.00
Equipment 1,700,000.00
Land 600,000.00
Building 3,600,000.00
 Liabilities (912,500.00) 6,137,500.00
Goodwill 1,302,500.00

36. PROFIT OR LOSS - 2026

The agreement further provides that additional cash payments would

be on January 1, 2026, equal to 135% of the amount by which annual
earnings of CRIS Company exceed P265, 000 per year, prior to January
1, 2026. Which means that the carrying amount is now higher of
about 47,500 than the recoverable amount.
t by which annual earnings of CRIS Company exceed P265, 000 per year, prior to January 1, 2026. Which means that the carrying amount